Drum Capital Management, a $1.1 billion private equity fund of funds shop, is launching a $500 million fund to invest in the credit and turnaround space.

Special Situation Partners III will debut next month, taking over where Special Situations II, which is 86% invested, left off, according to US Financial News.

In an interview, CEO Scott Vollmer, the dislocation sparked by the credit crunch has caught out numerous companies in the aftermath of excessive leveraged buyout markets.

Vollmer founded Drum Capital in April 2005.